Your wife did work in 2008! What Revenue have sent you out is correct. They may have neglected to mention that €26,400 of that cut-off point is non-transferable.
For example let say your wife earned €23,000 and you earned €40,000. (I'm not sure of the exact cut-off points) Anyway all your income would be at 20%. However say your wife earned €8.000 and you earned €60,000 then you would be liable to marginal rate tax. Your standard rate of tax would be €8,000 plus €44,000, the rest would be liable to 41%.